Credit Card Processing - Industry Lingo

To make the right business purchases, you have to know the language. Here's a guide to credit card processing lingo.

Acquiring Bank/ Merchant Bank
The financial institution that conducts business with merchants who accept credit cards. The bank buys the merchant's sales slips and credits the monetary value to the merchant accounts.

Card Absent/ Manual Entry
Credit card information that is manually keyed-in through a computer or terminal key pad as opposed to being swiped though a terminal.

Cardholder
An individual who has opened a credit card account to make purchases and obtain cash advances.

Card Present/ Swiped Card
Credit card information that is entered electronically by swiping the card through the terminal.

Chargeback
A reversal against a sale that was credited to the merchant's account. Chargebacks are usually the result of an error made by the card holder's bank, a misunderstanding by the customer, or fraud. The merchant must provide proof that the goods and services in question were provided to the customer.

Discount Rate
A fee charged by the bank for processing credit card transactions. The fee is based on a small percentage of the merchant's total sales volume.

ISO
An independent sales organization that is registered through Visa and MasterCard to set up credit card merchant accounts. ISOs represent banks or third party processors.

Merchant
A business that has a merchant account to accept credit cards.

MSR
A merchant service representative that contracts to an independent sales organization.

MOTO
Stands for mail order/telephone order. Typically, businesses that conduct credit card transactions over the phone or by mail are considered to be riskier than retail businesses that swipe credit cards.

Retrieval Request
A request from a cardholder's bank for information about a charge which is being disputed. Retrieval requests usually precede a chargeback.

Third-Party Processor
A company that processes credit card transactions and distributes funds. Many banks choose to outsource credit card processing to third party processors instead of handling it in-house.

Transaction Fee
A per transaction fee that is charged by the bank for processing transactions.

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